Eleven other people were injured, some seriously, in the early hours in the small town of Luttach in South Tyrol, known as Lutago in Italian, a police spokesman said.
The 27-year-old driver of the car, who failed a breath test for alcohol, was arrested on suspicion of vehicular manslaughter, the spokesman said.
The tourists, all young people, were standing along the roadside, close to a coach, when the accident happened.
The victims, all in their early 20s, were on a group skiing holiday and were mostly from the northwest German state of North-Rhine Westphalia, state premier Armin Laschet told a news conference.
“People in our country are thinking and praying for the victims and their families,” he said.